A Canadian federal court has awarded Louis Dreyfus Company (LDC) damages totaling approximately CAD $24 million after finding Canadian National Railway Company (CN) breached its statutory service obligations during the 2013-2014 crop year, the largest grain harvest in Canadian history.
The ruling follows a 2014 decision by the Canadian Transportation Agency (CTA) that determined CN failed to fulfill its service duties to LDC for weeks 13 through 35 of the crop year, spanning October 27, 2013, to April 5, 2014. The court assessed damages for lost profits and vessel demurrage charges but dismissed claims for reputational harm, citing a lack of specific evidence and noting the systemic nature of the disruptions affected the entire industry.
LDC operates ten grain elevators across Western Canada, with six located on CN’s rail network in British Columbia, Alberta, and Saskatchewan. The company’s grain from four key elevators (Joffre, Lyalta, Aberdeen and Kegworth" relied exclusively on CN’s rail services to reach export terminals.
CN attributed the service failure to unprecedented demand from the record harvest and an exceptionally harsh winter that severely impacted rail operations. Despite pre-positioning railcars and achieving record spotting rates in late 2013, CN struggled to meet demand during the coldest months due to operational constraints such as speed restrictions, infrastructure failures and reduced train lengths.
Under a confidential 1999 contract, LDC agreed to use CN exclusively for rail service at these elevators in exchange for guaranteed service units. The contract outlined service standards and remedies, including regulatory relief under the Canada Transportation Act.
